They all fall down

Collapsing buildings seem to be a good metaphor for Greece during these dark days. A number of edifices in Athens are likely to be demolished after being gutted by fire during rioting on Sunday night. The vandalism and violence destroyed what was a large and peaceful demonstration against the austerity measures in Greece’s latest loan agreement with the European Union and International Monetary Fund. The deal was approved by MPs but the turmoil this process caused within Greece’s parties emphasized that the country’s political structure is also crumbling.

While the expulsion of 43 MPs from PASOK and New Democracy for not approving the bailout was the most visible sign of a political system that is reaching the end of its days, the last week laid bare much greater inadequacies. No matter how many lawmakers are jettisoned from this hot air balloon, it won’t get off the ground again.

PASOK, which began its time in power just over two years ago with high hopes and a leader in George Papandreou who promised a new way of doing things, lies battered and beaten. It’s shedding MPs at an alarming rate and its poll ratings are about to drop through the floor. Papandreou, meanwhile, appears a little boy lost as the political rubble falls around him. More importantly, though, PASOK is absolutely devoid of ideas. It does not stand for anything after spending the last couple of years accepting the troika’s instructions with no input of its own.

New Democracy and its leader Antonis Samaras have been backed into a corner. A staunch opponent of the austerity-led philosophy of the first EU-IMF loan agreement, Samaras has been forced to argue that this time things are different. He has clung to his red line on pension cuts, hoping it will prove he is committed to the idea of not fueling the recession. But holding back the marauding troika with one hand while waving them on with the other, as was the case with a savage reduction to the minimum wage, means that Samaras is more traffic cop than five-star general in most people’s view.

The most spectacular implosion of all, however, was that of Popular Orthodox Rally (LAOS) and its leader Giorgos Karatzaferis. From his quotes by poet Constantine Cavafy and the Beatles to his claims about the German jackboot, Karatzaferis revealed himself to be nothing more than a very poor master of ceremonies in the three-ring circus of Greek politics. For all his posturing during this crisis, for all the witticisms and know-it-all comments, when the decisive moment came, Karatzaferis ran for cover. His decision to abstain from the vote will make it very difficult for him to visit village squares and claim to be the defender of the national interest. Nobody defended anything by hiding in Parliament’s corridors.

In contrast to PASOK, New Democracy and LAOS, the three parties of the left — Coalition of the Radical Left (SYRIZA), the Communist Party (KKE) and Democratic Left — have seen their support in the opinion polls increase. This reflects the collapse of PASOK and the rising anger with austerity measures. Yet, for those who feel the troika is dragging Greece toward a dead end, the three leftist parties have struggled to come up with credible alternatives.

KKE says Greece should stop paying its creditors but has little idea how the country, which is still running a primary budget deficit, could go on paying its own citizens. SYRIZA has suggested the threat of a disorderly default by Greece should be used as a leverage tool in negotiations, ignoring the fact that Germany and the other eurozone countries have — with the help of the European Central Bank — spent the last few months shoring up their defenses against such an eventuality.

Democratic Left is a little more creative in its approach. Its leader, the mild-mannered Fotis Kouvelis, suggests that some of Greece’s debt should be transferred to the ECB and that the country should issue investment bonds, as well as making more use of funds from the European Investment Bank. They are fine suggestions and show the kind of out-of-the-box thinking that was missing at the beginning of this crisis. Unfortunately, there is no longer the kind of good will for Greece within the eurozone that would make these options even remotely plausible.

In the swirl caused by the crisis, the parties have lost their relevance. Faced with the most complicated and destructive of problems, they are devoid of ideas. They offer Greeks no inspiration or shelter for voters. Some will suffer at the general elections, scheduled for April. It seems certain — given opinion poll ratings over the last few months — that the next government will be a coalition. These disheveled and disparate political elements will have to find a way to work together. It’s probably the greatest punishment their voters could inflict on them.

One of the reasons a coalition will be necessary is that there’s a lack of new blood in Greek politics. Those who might be tempted to hear the call are standing back. They can see the political structure ready to collapse and don’t want to be tainted with the asbestos of defunct partisanship, so they won’t enter until the whole thing has come down and the dust has settled.

As long as this persists, Greece will go through a strange transition phase where the discredited will continue to hold power. The next government will likely have to be based on cooperation between PASOK and New Democracy. But they might not be able to form a government on their own. Given that all the other parties — bar the tiny Democratic Alliance — oppose the EU-IMF loan agreement, what basis will there be for a coalition?

This is where we get into really dangerous territory because the eurozone and the IMF are only agreeing to provide loans to Greece on the basis that its government is fully committed to the terms of the agreement. A coalition that would include Democratic Left, for instance, might not be in a position to offer this commitment.

This means that within the next couple of months, the wishes of Greece’s lenders could come into direct conflict with the will of the Greek people. The eurozone has essentially already set out what kind of government it wants after the snap election. Greek voters won’t necessarily want to comply with these wishes. The respect for democratic principles that the European Union was meant to uphold could face its most severe test yet. Another edifice — the biggest and grandest of them all — could also come tumbling down.

Nick Malkoutzis

5 responses to “They all fall down

  1. It was refreshing to see how Mr. Papademos “scared” MPs what would happen in case of a disorderly default (n. b.: NOT in case of an orderly default!): shortage of imported medicines and foodstuffs.

    It baffles me why it would have taken over 2 years to point out to Greeks what is at stake. At stake are not really the salaries/pensions which the government might not be able to pay as long as it has a primary deficit. Those are domestic expenses. The government – with “Greek ingenuity” – would find ways to solve that problem, at least for a while. Possible solutions might be: IOUs (like in California); post-dated checks (like in half of Greece’s middle-market economy…); perhaps even a Drachma as a parallel currency; etc.

    What cannot be solved with “Greek ingenuity” is what needs to be paid for in cash Euros, such as imports for energy, medicines and foodstuffs.

    It almost sounds incredible to say this at the beginning of the 21st century and about a continent/common market as strong as the EU: not much needs to go wrong and one nation in that wealthy region of the 1st world might quickly be exposed to hunger, insufficient medicines and, of course, insufficient everything else which has been imported before.

    That is scary!!!

    I hate to say this: Greece has not lived up to her responsibilities as a member of the 1st world in the last 2-3 years. Not to mention her responsibilities to her ancestors who have so importantly shaped the value structures of the Judeo-Christian tradition.

    That is spilled milk and there is no point in crying about it. But I think it is URGENT that somebody on the Greek side stands up to be counted; comes up with proposals for a future for Greece; stimulates some sort of a national upheaval on the part of the silent majority who believes in “hard work and clean living”.

    Somewhere, I recently read the following: the main power centers in Greece — political parties, business leaders, professional guilds, public sector unions and the media — are fighting to preserve their privileges, blocking structural changes that could make the economy more functional.

    So the politicians cannot be expected to bring about change. The necessary change would require self-amputation of many politicians and other “power players”, and no one volunteers for self-amputation!

    The bottom line is: it’s got to be someone else. If the Greek mainstream waits too long to “stand up to be counted”, chances are that messiah’s on the left or right will take over the role of that “someone else”.

    And let me close with the following point: the crisis has not yet reached the heads of everyone in Greece. The ski resorts (I only know Agios Athanasios, and something luxurious like that you don’t see so often in the Alps!) are still crowded with Greeks who have second homes there and who have never been asked how they could afford them. And come spring/summer, the Athinians will migrate to second homes in the isles and the Thessalonikians will migrate to second homes in Chalkidiki. And those Greek friends of mine who are golfers will spend a week in Corfu on a tournament and they will regularly drive over to Porto Carras to play there. And while on the green, they might say “Crisis? What crisis? Oh, that crisis!” I am not making this up; I have heard it as late as last summer.

    Only when the crisis has arrived in the heads of union leaders, there won’t be any more strikes. I was recently reminded that there were no strikes in post-WW2 Austria when people were starving. Why not? Because everyone knew that there was no longer anything to be gained from strikes.

    One more point just came to mind. Those Greeks who have stashed their fortunes away in foreign accounts are likely to gain the most the worse it gets in Greece: when assets can be bought for a buttered bread, they will buy a lot of assets. Now, if to avoid that is not a final call to the mainstream to stand up and be counted; to assume personal responsibility regardless of perceived personal risks; to do what many of their ancestors have done before — well, then I don’t know what is!

    • The crisis in Greece is a Greek government problem, not a Greek private sector problem.

      What has caused the downward spiral is the Greek government offloading responsibility onto the Greek private sector.

      Please, refer to the Greek crisis as what is really is, a failure of Greek government not a failure of the Greek people. Merkel has it right.

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